I can't wait to buy that vintage 911 when interest rates fall, Kamala is in the White House and the Easter Bunny comes to town.
A home isn't the first thing Americans want when interest rates fall
Most Americans plan to take at least one financial action once rates drop, according to
By Rocio Fabbro, Quartz Media
Sept 4, 2024
Most Americans plan to take some type of financial action once interest rates go down. But while the housing market has been a core focus when it comes to affordability and rates, buying a home is apparently nowhere near the top of people’s priorities.
Most Americans do not feel rich with a million dollars, survey finds
According to data from NerdWallet released Wednesday, 61% of Americans have plans to make major purchases, investments, or make other financial decisions when the Federal Reserve finally carries out its long-waited rate cuts.
Lower interest rates will help ease some strain on consumers, who have begun to feel the pain in their wallets from higher prices across the board. The largest share of Americans surveyed by the personal finance firm said they plan to buy a car, since lower interest rates on car loans would mean smaller monthly car payments. That’s followed by investing some of their savings and refinancing a loan, all of which would become less costly once the interest rate declines.
Younger generations are especially itching to get a car, with 30% of Gen Z (aged 18-27) and millennials (28-43) saying they plan to purchase a car once interest rates drop.
Gen Z, the youngest generation included in the survey group, is the most eager to make financial moves, with 89% planning to take at least one financial action once rates go down. That’s compared with 78% of millennials, 62% of Gen Xers (44-59), and 31% of Baby Boomers (60-78).
The Harris Poll conducted the NerdWallet survey of 2,095 U.S. adults from July 9-11.
The Federal Open Market Committee, the Fed’s decision-making arm, is expected to lower rates at its next meeting on Sept. 17-18, after holding the federal funds rate steady at a 23-year-high of 5.25%-5.5% since July 2023.
While Fed Chair Jerome Powell said at the annual Jackson Hole conference last month that “the time has come for policy to adjust,” the question of just how much the Fed will cut is still hinging on several key pieces of economic data that are yet to come, including the August Consumer Price Index (CPI) and forthcoming weekly unemployment figures.
A decline in interest rates would also drive a drop in mortgage rates, which have declined for five consecutive weeks — but remain well above 6%. The projected drop in mortgage rates is expected to spur more home-buying activity, which has remained tepid as home buyers continue to wait out better rates and less expensive housing costs.
But rates would have to drop considerably for potential buyers to finally bite. Just 2% of homeowners surveyed by Bankrate in June said they would purchase a home this year at a mortgage rate of 6% or higher. And nearly half said mortgage rates would need to be below 5% for them to feel comfortable buying a home this year
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